C-Suite Challenge 2021: Leading in a Post-COVID-19 Recovery

Executive Summary: Meeting the Challenges Ahead

Since 1999, The Conference Board CEO Challenge® survey has asked CEOs across the globe to identify the most critical issues they face and their strategies to meet them. Since 2017, the C-Suite Challenge has expanded the survey pool beyond CEOs to the entire C-suite. This year’s survey, conducted following the US elections in November 2020, asked CEOs and C-suite executives for their views on the external stress points they face and the strategies they will focus on to mitigate risk and seize opportunity as part of the post-COVID-19 recovery. In addition, the survey asked respondents for their views on the long-term impacts that will emerge from the pandemic. A total of 1,538 C-suite executives, including 909 CEOs across the globe, responded.

Insights for What’s Ahead

When asked which issues outside of management control will have the greatest impact on their business in the coming year, CEOs cite the COVID-19 virus, vaccine availability, and changing consumer buying behaviors as the key potential game changers in 2021. However, despite modest growth expectations for the global economy in both the short and long term, business leaders seem unable to shake lingering recession concerns.

Recession risk is the second-ranked external stress point globally for 2021 and number one for CEOs in China.

The strategies CEOs say they will focus on in 2021 are a mix of prudent financial management and cultural changes to drive growth and improve performance. In the short term, preparing for growth and recovery will require finding the right balance between conserving cash and investing in the innovations and programs needed to succeed in a new commercial landscape.

2021—Light at the End of the Pandemic Tunnel: CEOs believe the distribution of a successful COVID-19 vaccine will have a significant impact on their businesses in the coming year and is likely contributing to their more positive view of future growth prospects by taking the worst-case economic scenarios out of play.

Lessons Learned: Adaptability, flexibility, clear communication, and the need for quick decisive action while maintaining calmness under fire are among the key lessons learned during the pandemic that CEOs say will help them manage the challenges ahead in 2021. Another lesson learned: the importance of external collaboration.

The Need for Speed: CEOs say their organizations will focus on accelerating digital transformation, modifying business models, and improving innovation, all while controlling costs and improving cash flow. The current crisis means the luxury of having years-long lead time to digitally transform and experiment with new business models is gone. Recovery will require finding the right balance between conserving cash and investing in innovation needed to succeed in a new commercial landscape.

The Business Model Challenge: Business model transformation is a critical focus for 2021 and seen by CEOs as an important growth lever, yet it is one of the hardest things for companies to do. Organizations must quickly pivot in response to new risks and opportunities requiring an extraordinary level of alignment across the enterprise as well as changes in organizational culture, structure, leadership, and a continuous evolution of talent and upskilling.

Levers of Growth: While CEOs and C-suite executives recognize that consumer buying behaviors are changing, they see new products and services and new customer segments, driven by data analytics and expanded strategic partnerships, as key levers of growth for their companies.

Human Capital Management: Despite the economic doldrums, CEOs remain focused on the recruitment and retention of top talent as well as the development of next-generation leaders. The focus on the core of talent management—recruitment, retention, and development—is an indication that human capital, once narrowly defined as the labor input in an organization’s business model and categorized as an expense, is being recognized as the engine of the enterprise. CEO responses show they recognize human capital as a valuable intangible asset with workers a critical stakeholder essential for future growth. [1]

Remote Work Reaching Equilibrium: A year into the pandemic, remote work may have reached an equilibrium, with few responding CEOs planning to make significant changes to the current number of remote workers as part of their human capital management focus in the coming year. Companies may have found a comfort level when it comes to the number of remote workers they employ. Increasing the number of remote workers ranks 17th out of 21 human capital focus options for 2021, while decreasing the number of remote workers is dead last. In the United States, prepandemic, roughly 5 to 7 percent of full-time employees with office jobs worked primarily from home. That figure could settle at 20 to 40 percent in the postpandemic world. [2]

Policy Impact: The change in US administrations appears to be having an impact on CEOs, views of the global business environment. [3] This year’s survey, completed after the US elections in November 2020, shows that, compared to our recent surveys, businesses have diminished levels of concerns both globally and in the US about trade disruptions, global political instability, and declining trust in government. However, US CEOs also express elevated levels of concerns about corporate tax policies and regulation.

Beyond the Pandemic: Long-Term Legacies of COVID-19

CEOs see a reduction in business travel, the automation of tasks (a clear outgrowth of their priority to digitally transform their organizations), large firms having better access to capital markets than smaller ones, more resilient supply chains, and an increased focus on climate change among the most likely long-term legacies of COVID-19.

Social Justice and Climate Risk: Compared to issues such as the pandemic and recession risk, CEOs do not see social justice concerns and climate change as having an immediate impact on their business environment in the year ahead. However, the majority do see a growing focus on both climate change mitigation and a need to address social issues in the public arena as likely long-term legacies of the COVID-19 pandemic. This view is likely driven by changing stakeholder expectations and increasing regulatory requirements.

Supply Chain Fixes: Even though concerns about global trade disruption have diminished, the pandemic has exposed vulnerabilities in supply chains, and CEOs believe the need to address global supply chain resilience will be one of the more important long-term legacies of COVID-19.

Access to Capital Markets: In the longer term, CEOs see large firms having greater access to capital markets relative to smaller firms. This signals challenges as well as opportunities for the business community. Since large companies often rely on small ones to do R&D and new product development, limited access to capital markets for small firms could have negative effects on innovation if merger and acquisition activity is used to squelch competition.

About this report

The anonymous survey was carried out in November into early December 2020 following the US elections in November. To provide a representative view from respondents from around the world, we weighted the 1,538 responses (909 CEOs, 629 C-suite executives) in aggregates (such as global and major regions) by the square root of the respondent’s country share in global output (GDP) divided by the respondent’s share in the total number of responses from their country. While CEO and C-suite priorities certainly vary on a company-to-company basis, we believe this report can serve as a discussion starter and idea prompter within organizations to ensure that the enterprise understands the challenges it faces, the strategic goals it needs to set to meet those challenges, and the strategies and tactics required to be competitive in a global marketplace. The project, coordinated by The Conference Board, was made possible thanks to collaboration with 14 organizations around the world that invited their members and contacts to fill in the questionnaire.

Leading in a Post-COVID-19 Recovery

When asked which issues outside of management control will have the greatest impact on their business in the year ahead, CEOs cite the COVID-19 virus, vaccine availability, and changing consumer buying behaviors as the game changers in 2021. Despite the modest growth expectations, both in the short and long term, business leaders, who have expressed relatively more confidence about future prospects than earlier in 2020, according to our CEO Confidence surveys, seem unable to shake lingering concerns over recession. [4] This concern may be linked to relatively lackluster global consumer confidence numbers. [5]

2021—Light at the end of the pandemic tunnel? CEOs believe the distribution of a successful vaccine will have a significant impact on their businesses in the coming year. While several factors are contributing to a recent rise in CEO confidence in the United States and Europe, our survey indicates vaccine distribution is contributing to the more positive view of future growth by taking the worst-case economic scenarios out of play. The spread of COVID vaccines will also provide greater clarity and predictability around short-term planning and operations such as when physical workplaces can reopen and the dependability of supply chains. For example, a survey of US-based managers and executives by The Conference Board in September 2020 found that although many US businesses hoped to reopen their workplaces by the end of that month, 35 percent said the timing of when their companies will reopen was still unknown, making even short-term planning difficult. [6]

Compared to their global peers, only CEOs in China, where lockdowns have been severe and unproven experimental vaccines have been available to select populations since August 2020, see an effective vaccine release as having less of an impact on the local business environment in 2021—they rate its impact ninth overall as an issue outside of management control. Globally it is third, with US CEOs giving it the highest ranking globally at number two.

Endnotes

1Paul Washington, Rebecca L. Ray, PhD, Solange Charas, PhD, and Amy Lui Abel, PhD, Brave New World: Creating Long-term Value through Human Capital Management and Disclosure, The Conference Board, December, 2020.(go back)

2Gad Levanon, PhD, COVID-19’s Biggest Legacy: Remote Work and Its Implications in the US Postpandemic Labor Market, The Conference Board, forthcoming February 2021.(go back)

3It should be noted that because the list of options in the survey changes, expands and contracts each year to reflect ongoing changes in the business environment, exact year-over-year rankings are not available. Rather the rankings comparisons are meant to show a broad trend in rising or declining sentiment about each option relative to other issues.(go back)

4For the latest information on US and European CEO Confidence data please go to https://conference-board.org/topics/CEO-Confidence(go back)

5For the latest information on The Conference Board Global Consumer Confidence Index please go to https://conference-board.org/data/bcicountry.cfm?cid=15(go back)

6Frank Steemers, Robin Erickson, PhD, Amanda Popiela, and Gad Levanon, PhD, Adapting to the Reimagined Workplace: Human Capital Responses to the COVID-19 Pandemic, The Conference Board, October 2020.(go back)